Stephen Hester lines up £1.6m RBS bonus

Taxpayer banks set to report £12bn losses as bosses agonise over their big bonus payouts

STEPHEN HESTER, chief executive of Royal Bank of Scotland, is in line to collect a bonus of up to £1.6m despite the bank posting losses of several billion pounds.

Talks over the bumper payout are expected to reach a conclusion within days and could be announced alongside the bank's results later this week.

Although the 49-year-old has yet to make a final decision on whether to accept the pay deal, it is understood that the conditions in his contract would permit a large payout.

The deal comes amid continuing controversy over bonuses at taxpayer-backed banks. RBS, 84%-owned by the state thanks to huge injections of government funds, will confirm this week that it is to pay out £1.32 billion in bonuses to its investment bankers.

Lloyds Banking Group is expected to award £200m to its staff and is on a collision course with investors over a bonus for Eric Daniels,